UK households cut back on nonessential spending as cost of living bites

Households across the UK have sharply reduced their discretionary spending over the past year, reprioritising financial stability as the cost of living continues to rise. Figures from MoneySuperMarket’s latest household money index indicate that the typical gym-goer is now spending just £13.20 per month, down dramatically from £51 a year earlier. This shift in consumer behaviour highlights a decisive change in spending priorities as more people seek to safeguard their long-term financial wellbeing.

Streaming services such as Netflix and Amazon Prime have not been immune to these cutbacks. Average monthly expenditure on streaming fell from £32.20 in September 2024 to £23.50 in the same month this year. Video gaming saw an even steeper decline, with average spending tumbling to £10.90 per month from £43.70 last year—a reduction of 75 per cent.

Consumers are also becoming savvier about everyday expenses. Spending on mobile phone use and top-ups is £10 less on average, now at £29.80 per month. Broadband and telephone bills have dropped from £46.70 to £41.20, reflecting a growing tendency to seek out competitive deals. Even essential outgoings such as life insurance and toiletries have seen declines, now standing at £13.79 and £25 per month respectively.

According to Kara Gammell, a personal finance expert at MoneySuperMarket, many British households are taking a strategic approach, leveraging their disposable income to bolster their financial future rather than indulging in short-term luxuries. This redirection of funds is apparent in the rise of loan and credit card repayments, as well as increased contributions to both private and workplace pensions, all signalling a concerted effort to foster financial resilience.

The household money index also reports that consumers are facing higher daily outgoings overall—up by eight per cent to £55.26 a day. Key drivers of this increase include an 18 per cent rise in fuel prices, a ten per cent increase in mortgage costs, and groceries up by eight per cent. School and childcare expenses have also surged by 23 per cent.

Despite the reduction in discretionary spending, the stability in inflation at 3.8 per cent and a moderation in wage growth are providing some measure of relief. These factors have led banking analysts to anticipate an interest rate cut from the Bank of England before the end of the year, with expectations that the base rate could fall to 3.75 per cent.

For now, British households are demonstrating a notable commitment to long-term financial health, having adjusted their spending habits to adapt to ongoing economic pressures.